1. Field of the Invention
This invention relates to the field of on-line auctions and, more particularly, to a method for conducting an on-line auction in which bids are evaluated in light of not only their absolute value but also their timing and/or relative value with respect to other bids.
2. Description of the Related Art
Auctions are a time tested method for selling products, and are generally viewed as the best test of an item's worth. Something is worth as much as someone is willing to pay for it. In a traditional live auction, an item is offered for sale, and those persons who are interested in purchasing it bid on it, in increasing increments, until the person who is willing to pay the most acquires the item. This is viewed as the classic measure of the item's true value, as the seller gets the highest price possible for his item, while the buyer knows that he paid no more than necessary to acquire the desired item. For centuries, this system worked well.
A key aspect of the auction is that all of the bidders are in the same place, and the bidding is held in a contracted time period, usually lasting a few minutes, so that the bidders can make their bids with a full and fair opportunity to acquire the items upon which they seek to place bids. The auction gives everyone a fair chance to acquire an item which is up for bid on the auction, and also gives the seller the best chance to sell the item at the best price. It is this sense of equity to all parties which is the strongest virtue of an auction.
In the ever-changing e-commerce world, the concept of on-line auctions (such as those offered by eBay) has taken hold. These auctions are generally similar to live auctions, except that the bidders do not have to be physically present to bid on an item and the bidding takes place over an extended period, lasting days or weeks, so that the item may be bid upon by as many interested buyers as possible.
As on-line auctions have become more popular, some buyers have become adept at gamesmanship to seek to acquire items at less than their full and fair market value.
Since an on-line auction takes place over an extended period of time, it is standard for the seller to set a predetermined time at which the auction will end, even if the bidding has not reached its highest possible level. For example, if a seller offers an item for bid, and sets a deadline for the final bid at 5:00, P.D.T. on September 5, the bid which will win is the highest posted bid at that time, even if it was placed only five seconds before the deadline, and even if there are other buyers who may be willing to pay more, perhaps much more, to acquire the item.
Under this system, a potential buyer has no incentive to place a bid early on in the bidding process, since that will telegraph interest in the item, and give other possibly interested bidders an idea of the perceived value of the item. It is therefore commonplace for bidders to place their true competitive bids in the last few seconds of the auction, even where the item has been offered for sale for days or weeks beforehand. This tends to suppress the amount of the bid, because bidders do not really know what bids they need to exceed to secure the item. Additionally, a bidder who has placed a low, early bid may have a false sense of believing no one else is interested in the item, while, in fact, other bidders are lurking, hoping for the chance to acquire the item with a (literally) last second bid. This artificially suppresses the price of the item, and penalizes interested bidders who do not know of the competitive bids placed.
Known methods of conducting on-line auctions are also not optimized to accommodate all aspects of prior auction methods. For example, some prior known prior auctions provide certain rights for certain people. As a specific example, in the construction business, one contractor may have the right to match the lowest bid and be awarded the contract. This right is assigned even before the auction begins. Certain online auctions allow someone who placed an earlier initial bid than the high bidder to become the high bidder by merely matching the high bid and not having to actually outbid it. Auctions at the website Amazon.com offer the option that the first person to place an initial bid in the auction gets a 10% discount if he wins the auction.
In each of these cases, certain benefits are based on a ranking system. The first person to place his initial bid is in first place, the second person to place his initial bid is in second place, and so on. Once someone has a ranking of first or second place, there is no way to improve that ranking or lose that ranking. In this system, there is no advantage for the first ranked bidder to place a second bid until the final seconds of the auction because his ranking will not improve. There is also no advantage for him to bid initially more than the minimum required amount.
There is thus a need for a more equitable system which will assist a seller in realizing the full and fair price for auctioned items, and which will permit potential purchasers to have a fair chance to meet competitive bids to acquire thereby the desired items.